Tag: FOCAC

The Forum on China-Africa Cooperation (FOCAC) was a highlight of the past month and once again put China’s overseas involvement under domestic spotlight. Held in Beijing from Sep 3-5, the extravagant event brought high-level representatives from 53 African countries to two days of dialogue, deal making and celebration of China-Africa friendship. In his opening speech, President Xi Jinping announced a $60 billion package to finance development in Africa and spelled out the “5 NOs” and “4 CANNOTs” principles (五不四不能) that would lay the foundation for China-Africa relationship in the coming years. The principles mainly served as a re-affirmation of China’s long-standing non-interference, “no-strings attached” aid policy and a warning to third-party forces trying to undermine the relationship.

In many senses the forum delivered what was intended of it. Politically, it confirmed China’s commitment to the continent as a benevolent partner. Economically, it produced a long list of major infrastructure and investment deals between African stakeholders and their Chinese counterparts. And it even paid environmental dividends for the host city by bringing a week of sapphire blue sky (dubbed “FOCAC blue” by the city’s residents) which ended as soon as the forum was over.

But the high-profile forum also exposed a chronic tension between China’s overseas engagements and its domestic public opinion, a pitfall that policy makers usually strive to circumvent. As soon as China’s $60 billion pledge to Africa was made public, the Chinese Internet was buzzing with murmurs and whispers of disbelief and sarcasm. Under Weibo posts that featured President Xi Jinping’s speech announcing the renewed pledge, where comments were often censored or outright blocked, netizens reacted with emojis of dismay and disapproval.

Under Weibo posts that featured President Xi Jinping’s speech announcing the renewed pledge, netizens reacted with emojis of dismay and disapproval.

“The controversy around aid to Africa is not so much about whether such investments deliver good returns. It’s a way to express domestic frustrations. The Chinese public can be generous if their own lives are comfortable,” said one commentator on Weibo.

FOCAC happened at a tricky time when the Chinese public was anxious over a series of domestic measures on taxation and social insurance that would affect the pockets of millions of Chinese enterprises and individuals. Among those policies rolled out briefly before FOCAC, shifting the collection of pension fund deposits to the tax authority, widely perceived as more stringent in its efforts, was interpreted by the media as the government’s attempt to fill an enlarging national pension hole which would result in a net reduction of many people’s monthly take-home salary. China’s high social benefit charges have been a burden on enterprises hiring large number of employees. For years, corporates try to dodge their share of pension payments by lowering the reported salaries of their employees, while worker are more than happy to pocket more take-home salary that they can dispense on their own terms.

The government’s revenue-grabbing move touched off widespread complaints from the society, and the high-profile $60 billion pledge to Africa (equivalent to almost 400 billion in RMB) understandably received a fair amount of trolling. To some extent this represents the worst nightmare of Chinese policy makers: Chinese financing overseas is pitched directly vis a vis its domestic fiscal policies. For a long time, the Chinese government has been low-key (to the extent of being secretive) when it comes to releasing its foreign aid figures, largely because of concern over domestic criticism. Senior aid workers have openly complained about the public’s hostility towards Chinese aid overseas. The Chinese Political Compass, an online survey that maps Chinese ideological spectrum online, lists the foreign aid question in its questionnaire as one of the 50 issues dividing and polarizing the Chinese Internet.

Experts believe that the Chinese public is misguided. Wang Yiwei, a scholar at Remin University in Beijing and an expert on the BRI, claimed in a Weibo post that majority of China’s pledged financing would require return on investment. It’s not free lunch. And based on China’s track record, returns on Chinese investments in Africa are “unparalleled” by its investments elsewhere. “Chinese are not stupid. They won’t rush to a place if it doesn’t mean economic opportunities for themselves,” Wang proclaimed, “those who spread rumors about Chinese involvement in Africa are trying to create tension between the public and the leadership.”

Wang was mainly referring to the previous round of Chinese pledge made at the 2015 Johannesburg FOCAC, which also amounted to $60 billion. Within that package, only $5 billion was grant money that did not require repayment. The rest was either concessional loans (loans with below-market interest rates), or injection into equity funds that are largely market-based and generally seek (modest) profits. The new $60 billion package announced on Sep 3 is made of $15 billion of grants and no-interest/concessional loans, $20 billion regular loans, $10 billion private investments and another $15 billion dollar injection into special funds.

Information from Africa seems to bear out the claim that China talks more serious business in Africa than people generally perceive. Bright Simons, president of the Ghana-based MPedigree Network, wrote that while China appeared generous with pledges, it was strict with actually unlocking them into real financing. Of the 2015 pledge, only 2/3 (45 billion) had actually come through, most of which “in the form of sovereign-backed, natural resource securitized loans.” Zimbabwe was particularly bad at translating Chinese pledges into actual financing, redeeming just 2.5 billion of Chinese funds from over 33 billion promised over the past two decades. Angola did much better in this regard largely due to its oil reserves that allowed a reliable means to service its loan payments to China.

Weibo commentators who consider themselves endowed with a long term view urge policy makers to disregard public sentiments and stay on course of its African strategy: “You should stick with things that are fundamentally right.”

On the other hand, the Global Times‘s editor in chief Hu Xijin reminds readers that they should equip themselves with a “great power mentality:” “China will not be able to maintain its global stature today if it does not fulfill its obligations as a great power,” he wrote, “the idea that foreign assistance is immoral as long as you still have poverty inside the country represents agrarian era thinking and cannot guide our grand practices today.”

Like it or not, the architects of China’s grand schemes along the Belt and Road would probably have to tango with domestic public opinion for a while.

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This blog is started by those who aspire to tell a better story about China’s involvement beyond its borders. We are journalists, campaigners, analysts, scholars and practitioners with years of experience navigating Chinese politics, bureaucracy, finance and their ramifications overseas.

The Team

Ma Tianjie

Founder/Editor

Ma Tianjie has been involved in policy analysis and environmental advocacy in China for over a decade. He also runs Chublic Opinion, a popular Chinese public opinion blog. He was an English major at Peking University and later earned his Master’s degree in environmental policy from American University. His areas of interest include China’s overseas footprint, environmental governance and online public opinion.

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Calvin Quek

Editor

Calvin is a Visiting Fellow at the Tsinghua University Finance and Development Center, focusing on green finance development in developing countries. He is also head of Greenpeace East Asia’s Sustainable Finance Program and leads its engagement of the financial community. In the past, Calvin served on the Board of the China Carbon Forum, and was the first Executive Director of the Beijing Energy Network. Prior to coming to China, Calvin worked at Citigroup for close to a decade. Calvin has an MBA from Peking University, and an MSc in Wealth Management from Singapore Management University.

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Tom Baxter

Editor

Tom Baxter works in communications at Greenpeace East Asia covering climate and energy issues ranging from air pollution to Chinese overseas investments. He works in the intersections between journalism and the NGO world and his writing has previously appeared in The Economist, South China Morning Post, China Dialogue, and elsewhere. Tom studied history at the University of Glasgow and Hong Kong University. His interests include China’s increasing global influence and the role of the media as an agent in public debate. He also maintains a keen interest in literature and the Chinese language.